GCC’s construction sector spend surges 7.7% to $72 billion

, Saudi Arabia and the UAE continued to command the largest market shares in terms of projects due for completion during 2014.

UAE is estimated to spend $21.28 billion on projects. — KT file photo

Dubai — Total construction projects expected to be completed in 2014 in the GCC registered a 7.7 per cent rise to $72 billion, underscoring the rebound of the industry, a new study reveals.

The residential and commercial sectors, respectively accounting for $30 billion and $11.8 billion worth of construction projects expected to be completed by 2014, remain the sectors that attract the most investment, according to Ventures ME research.

Investment in construction projects in educational and hospitality sectors recorded an increase of 30 per cent in 2014 compared to 2013. Projects in the medical sector also recorded an increase in terms of investment.

With total value of projects estimated at $33.8 billion and $21.28 billion respectively, Saudi Arabia and the UAE continued to command the largest market shares in terms of projects due for completion during 2014 followed by Qatar ($9.06 billion), Kuwait ($3.79 billion), Oman ($3.02 billion) and Bahrain ($1.05 billion), according to the research commissioned by dmg events, the organiser of Index and workspace at Index exhibitions. “This up trend in construction activities has translated into increased opportunities for the interiors and fit outs markets with investment estimated to reach $7.84 billion by end of this year,” the report said.

“This is the fourth consecutive year that we have invested in this study,” said Frederique Maurell, group event director for Index and workspace at Index.

“The GCC interior contracting and fit-out sector encompassing internal wood works, soft and hard furnishings, furniture, lighting, partitions, flooring, kitchen and bathroom fittings constitutes approximately 10 to 20 per cent of the average construction project value and closely mirrors the trends in the building construction market,” said the report.

Interior and fit out spend in residential sector projects accounts for the largest share of 43.4 per cent ($3.2 billion) of the overall GCC market.

Saudi Arabia remains the largest market with an estimated $13.61 billion worth of residential units to be completed and with interior contracting and fit out accounting for approximately 11 per cent of total project costs ($1.50 billion). The UAE with $1.3 billion takes the second place for interiors spend on residential projects likely to be completed in 2014 ($11.83 billion). Kuwait is likely to more than double its share — from $60 million in 2013 to $160m in 2014. Qatar has an interior spend of $206 million in terms of projects completed in 2014, down from 2013.

The GCC commercial market is the second largest segment in terms of project completions after the residential sector with projects worth $11.7 billion likely to be completed over 2014. The commercial sector has also emerged as the segment with the largest potential for the interiors and fit out market as the expanding supply of the commercial sector in the GCC provided opportunities to the tune of $1.29 billion worth of interiors development from projects likely to be completed over 2014, the report said.

Tourism sector continues to be the most promising in terms of growth in the GCC countries. The region has projects in the hotel sector worth $4.8 billion (up 30 per cent from 2013) due to be completed in 2014 with Saudi Arabia ($2.12 billion), the UAE ($1.45 billion) and Qatar ($740 million), sporting the largest growth in the number of hospitality projects under construction as of October 2014 (up from $300 million in 2013).

“The upturn in the GCC hospitality sector spells improvement and opportunity for interiors development not only in terms of interiors and fit-out contracts on fresh projects, but also for hotel refurbishment and fit-out, as competition spurs existing hotels to invest in fresh interiors and fit out to keep up with the new hotel brands pouring into the market to attract visitors. From $828 million in 2013, spend in this sector is expected to rise to $1.29 billion by end of 2014,” said the report.

The interior contracting and fit out developments in the retail sector is likely to record a lower spend of $203 million (down by 24.23 per cent from 2013) due to relatively lower projects completed, with the exception of Qatar, which is making up for its relatively late entry into the retail markets of the region with larger number of retail developments slated for completion in 2014, the report said.

The interiors contracting and fit-out developments in the healthcare sector is estimated to earn $341 million on projects worth $4.27 billion expected to complete in 2014. The UAE has taken the lead in terms of healthcare projects likely to be completed in 2014 with expected interiors and fit out spend approximating $186 million; Saudi Arabia, with an expected interior and fit-out spend of $98 million has emerged as a closely competing market, followed by Qatar with $28 million.

The interiors contracting and fit-out developments in the educational development sector is estimated to earn $588 million on projects worth $7.35 billion expected to complete by the end of 2014.

• issacjohn@khaleejtimes.com